Gold fell as inflationary concerns overshadowed early optimism around negotiations to resolve the Iran war. Bullion slipped as much as 1.2% to below $4,140 an ounce, erasing a modest gain in the previous session.

Higher consumer prices stoked by nearly four months of conflict in the Middle East raised the likelihood that central banks will hike borrowing costs. This shift creates a distinct headwind for precious metals, which do not pay interest. Despite initial market hope regarding diplomatic talks between the United States and Iran, the broader reality of persistent inflation pressures continue to weigh heavily on investor sentiment, prompting a sell-off in the safe-haven asset as markets adjust to the potential for prolonged high interest rates.

-Bloomberg